For the purpose of calculation of networth to see if a company is sick in view of the provisions of the SICA
Networth = Equity +Free Reserves and surpluses - Accumulated losses
Question : In the above is the amount in Securities Premium Account (i.e amount recieved as premium when shares are issued) to be included along with Equity + Free reserves?
Sastry
Free Reserves include Share premium too. Reserves other than free reserves has to be excluded like Depreciation Reserve, Reserves created on Revaluations of assets or due to amalgmation or any other reserves created for specific purpose to be exclueded.
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